Returning migrants boost Mexico’s middle class

For a generation, the men of this town have headed north to the land of the mighty dollar, breaking U.S. immigration laws to dig swimming pools in Memphis and grind meat in Chicago.

In the United States, they were illegal aliens. Back home, they are new entrepreneurs using the billions of dollars earned “on the other side” to create a Mexican middle class.

The migrants “did something bad to do something good,” said Mexican economist Luis de la Calle.

Where remittances from El Norte were once mostly used to help hungry families back home simply survive, surveys now reveal that the longer a migrant stays up north, the more likely the cash transfers will be used to start new businesses or to pay for homes, farm equipment and school tuitions.

From Santa Maria del Refugio, a once rural, now almost suburban, community of 2,500 in central Mexico’s Guanajuato state, young men have gone to the United States seeking the social mobility they could not find at home.

Their money, and many of the workers themselves, have since returned, as the U.S. economy slowed in the global recession. For the first time in 40 years, net migration is effectively zero. About the same number of Mexicans left the United States last year as arrived. Migration experts expect the northward flow to pick up again as the U.S. economy improves. It is also possible that as Mexico provides more opportunity for upward mobility, some potential migrants will stay home.

In Santa Maria, dollars scrimped and saved in the United States have transformed a poor pueblo into a town of curbed sidewalks, Internet cafes and rows of two-story homes rising on a hillside where scrawny cattle once grazed.

“Look at this place — it’s practically a city now,” said Roberto Mandujano, 50, who moved back to his home town and opened a hardware store five years ago. “There was nothing here when I left.”

Mandujano is a member of a new demographic in Mexico, the anxious, tenacious, growing middle class who own homes and cars and take vacations. They see the United States more as a model than an exploiter.

Born into a family of 10 siblings, Mandujano set out from Santa Maria and crossed the Rio Grande at age 17. He found work on landscaping crews and highway projects, and eventually earned a plumber’s license. Now back home in Mexico, he runs half-marathons on the weekends and owns a well-stocked store (“my little Home Depot”) and a U.S. green card, traveling back to Texas whenever he wants.

“On an airplane,” he said with pride.

Development experts and economists here have struggled to measure the extent to which remittances, the money sent home by migrants, have fueled middle-class growth. The Mexican government is good at counting the dollars flowing into the country. Less understood is what recipients are doing with the money.

Invested remittances

Some 12 million Mexicans — which represents 15 percent of Mexico’s labor force — reside legally and illegally in the United States, according to the Pew Hispanic Center. Researchers say the longer that migrants work in the United States, the more their money drives upward mobility.

“We have found that in the first three to five years, the ultimate destination of the remittances is to help the families, but after seven years, the money is saved and then invested,” said Victor Corona, a professor at the University of Zacatecas and an expert in migration.

Still, the remittance system has exacted a toll: absent fathers, strained marriages, frayed families. Development officials say that Mexico’s reliance on remittances should be replaced by an economy that produces good jobs in Mexico — and that middle-class growth that relies on migration is ultimately a sign of weakness, not strength.

In Central American countries such as Guatemala and El Salvador, which are even more dependent on cash sent from the United States, remittances have also nurtured new businesses and an incipient middle class. But far more money goes to Mexico.

During the past decade, remittances sent by Mexicans from the United States have exploded, from $3.7 billion in 1995 to a peak of $25 billion in 2007.

According to the most recent social and economic data, a narrow majority of Mexicans are no longer poor but members of the middle class, marking a profound demographic shift in a country where 80 percent of the population was living in poverty in 1960.

The middle class in Mexico does not look like its counterpart in Europe or the United States. Its members make far less money. At the lower rungs, they are more vulnerable. They are less educated. Many lack formal employment, leaving them with no insurance, health care or pensions.

Persistent inequality in Mexico means that its emerging middle class remains closer to the country’s poor than to its affluent.

The cash transfers are just one of many factors driving the growth of the middle class. In the 1980s and 1990s, Mexico swung from one crisis to the next: a major earthquake in the capital, bank nationalization, the sudden devaluation of the peso, an armed rebellion in the state of Chiapas.

In the past 15 years, the country has tamed inflation. Families now have far fewer children, and they invest more in them.

Mexico is more competitive, more global, more urban, and with the opening of markets, prices for most consumer goods have dropped. The government has also made a concerted if imperfect effort over the past 20 years to provide a social safety net that subsidizes schooling, health care and food.

Then there’s Western Union’s cash wire.

Mexican workers sent home nearly $23 billion last year, greater than the direct foreign investment made by all multinational corporations. Remittances are now equal to the foreign currency exchange generated by Mexico’s tourism industry or its oil sector.

According to economic surveys, about half of the 112 million Mexicans have family living in the United States, and one in five has a relative who regularly sends money back home. The average amount sent in May was $329.

After China and India, Mexico is the world’s third-largest recipient of remittances, World Bank data show.

The largest stack of remittance cash — nearly 62 percent — goes not to the poorest Mexicans but to the lower middle class, according to surveys of recipients conducted by Mexico’s Interior Ministry.

Tougher border enforcement on the U.S. side has put the cost of migration out of reach for poor Mexicans, who can’t afford the thousands of dollars in fees smugglers charge for fake documents or a GPS-guided trek through the Arizona desert.

A study for the Inter-American Development Bank found that 43 percent of those who received remittances from the United States described their family’s economic situation in Mexico as “good to excellent.” Only 24 percent said it was bad or very bad.

“It feels like a luxury to be here with my family, in my own country,” said Santa Maria business owner Fernando Muñiz, who first went north at age 15 and built tract houses in Arizona.

Now Muñiz owns his own home, debt free, and a few years ago opened a mini-market and an Internet cafe, with eight computers and decent broadband, with money he saved working in the United States.

“My son is 6 years old and already knows how to use a computer. I didn’t learn how to use one until I was 28,” said Muñiz, whose father was poor and died poor, even though he went to the United States many times for agricultural work.

“I would have liked for my father to see this,” Muñiz said.

They used to work in Houston

Although a weak U.S. job market and tougher border enforcement — along with a surge of kidnapping and killing in Mexico targeting migrants — have slowed illegal immigration to the United States over the past few years, the Bank of Mexico predicts that remittances will hit record levels again in 2013, as the U.S. economy picks up.

Just down the road from Santa Maria, Luciano Figueroa and his brothers employ nearly 50 workers between their butcher shop, cattle ranch and spacious family-style restaurant called Tres Hermanos (Three Brothers), where an American flag flutters atop the roof.

Figueroa swept his arm toward the dining room of his packed barbecue joint. “Every one of these waiters used to work in Houston,” he said. “Now they work here.”

A decade ago, when Figueroa’s father was so poor he had to sell his last cow, Figueroa’s oldest brother went to work at a meat packing plant in Chicago.

He came home four years later with $8,000. The brothers invested the money in a meat saw and 25 head of cattle, opening a butcher shop next to the highway. Five years later, they’d earned enough to open the restaurant.

“Now I feel like a businessman,” Figueroa said.

Their cattle herd has grown to 200, and with the Japanese automaker Honda opening a new assembly plant less than two miles away, Figueroa said he’s planning a trip to the United States soon.

“To Disney World,” he said.

Supporting a family in the U.S.

A face-to-face survey of 1,200 Mexicans released last month by the Pew Research Center found that more than half of respondents thought Mexicans who move to the United States have better lives. But just 37 percent said they would be willing to go, and 19 percent said they would do so illegally.

It is harder to measure the cultural and political influence of returning migrants such as Mandujano, the hardware store owner and avid runner, whose lifestyles have changed dramatically from the corn-and-beans existence of their forebears. Studies indicate they have higher expectations for better government. They are bringing American habits, customs and consumption tastes back home.

Mandujano said he had an epiphany one Sunday in a Houston park while drinking a can of beer on his day off and watching Americans jogging all around him.

“I thought: ‘What am I doing?’ ” he said. “I went out and bought a pair of running shoes the next day.”

With their daughters in high school and college, Mandujano’s wife remains in Houston. After decades of saving and sending money home to Santa Maria, he now does the reverse, supporting his family in Texas with earnings from the hardware store in Mexico.

“Every month I pay off their Sam’s Club card,” he said, shrugging. “I can do it online.”